Summary

Last week, the stock market sentiment was once again bullish. In Europe, the German DAX increased by almost 2%, the British FTSE250 rose by 1.6% and the French CAC40 soared by 0.4%. This was not surprising – the market learnt another portion of robust macroeconomic data from the Eurozone. The values of the confidence indices were high, the GDP growth rate for the third quarter exceeded market projection (2.5% y/y vs 2.4% y/y) and the September’s unemployment rate stood at 8.9% vs 9% expected. Wall Street ended the last week in positive territory as well. The NASDAQ went up by 0.9%, the DJI took off by 0.5% and the S&P500 rose by 0.3%. However, a publication of the payrolls, which failed second time in a row, turned out to be the fly in the ointment. Although the unemployment rate dropped to 4.1%, the non-farm payroll amounted to only 261K vs 314K projected and the dynamic of wages (2.4% y/y) was 0.3 percentage point lower than expected. There was also a FOMC meeting last week. According to the consensus, the interest rates remained unchanged and the bank’s message did not contain any new information on the monetary policy. The market expected that another interest rates hike would take place in December. In addition, Donald Trump announced that Jerome Powell would be a new president of the Fed. It is said that he is a monetary dove. The market assumes that the successor of Janet Yellen will continue the process of gradual monetary policy normalization.

The Polish stock market indices continued to outperform the western ones last week. During the whole past week, the WIG20 went up by 0.2% and the mWIG40 increased by 0.6%. Meanwhile, the sWIG80 ended the week in the red color (-0.5%) and continued a strong downward trend which was started at the beginning of April. The banking sector was outstanding last week, thanks to the ING BSK and Millennium, among others. Both companies showed solid financial results for the third quarter. On the other hand, CCC had significantly less successful week – its share price dropped by almost 5%. The company reported that its revenues increased by only 1.2% y/y in October. Investors learnt also the latest reading of the manufacturing PMI. The result of 53.4 pts. was clearly lower than projection (54 pts.).

At the beginning of a new week there will be some important readings from the Euroland. Today, investors will learn the services PMI, the Sentix index and the PPI index. In the next few days the Donald Trump’s speeches will be in the spotlight. The President of the US will visit many countries in Asia. In Poland, there will be a MPC meeting. In addition, many blue chips will publish its financial statements for the third quarter: PGE, Tauron, Energa, Pekao, Alior Bank, Cyfrowy Polsat and Eurocash.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week, the WIG20 saw slight increases at low volume of trade (probably due to the celebration of All Saints’ Day) and ended the last Friday’s trading session at 2,494 pts.. Nevertheless, the apathy of the blue-chip index was going on. The index of the largest Polish companies moved in a consolidation with limitations at 2,420 pts. and 2,560 pts.. A continuation of a long-term upward trend requires a breakthrough of the resistance level at 2,600 pts., so for the time being, it may be worth taking an anticipating position.

Graph 2: Kruk daily. Source: Stooq

This time Kruk was chosen as a company of the week – during the last five trading days its share price grew by 9.1%. The largest polish debt collection company published solid financial results for the third quarter and maintained ambitious investment plans. Thanks to the growths, the market defended a line of a long-term upward trend. The MACD oscillator indicated a buy signal. The RSI oscillator rose dynamically, whereas it remained out of the buyout area. As a result, a long-term growth pattern was undisturbed. The nearest resistance levels stand at the psychological limit of PLN 300 and at the barrier of PLN 310. Their breakthroughs will probably be a signal for further increases towards historical peak (PLN 349).

Authors: MM Prime TFI S.A. Investment Management Team

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